LO.4 A business entitys taxable income before the cost of certain fringe benefits paid to owners and
Question:
LO.4 A business entity’s taxable income before the cost of certain fringe benefits paid to owners and other employees is $400,000. The amounts paid for these fringe benefits are reported as follows.
Owners Other Employees Group term life insurance $20,000 $40,000 Meals and lodging incurred for the convenience of the employer 50,000 75,000 Pension plan 30,000* 90,000
*H.R. 10 (Keogh) plan for partnership and S corporation.
The business entity is equally owned by four owners.
a. Calculate the taxable income of the business entity if the entity is a partnership, a C corporation, or an S corporation.
b. Determine the effect on the owners for each of the three business forms.
Step by Step Answer:
South Western Federal Taxation 2011 Taxation Of Business Entities
ISBN: 9780538498616
14th Edition
Authors: James E. Smith, William A. Raabe, David M. Maloney